Yazdchi v. American Honda Finance Corp. , 217 F. App'x 299 ( 2007 )

United States Court of Appeals
Fifth Circuit
IN THE UNITED STATES COURT OF APPEALS FILED
FOR THE FIFTH CIRCUIT
February 6, 2007
Charles R. Fulbruge III
No. 05-10479 Clerk
AHMAD YAZDCHI, doing business as Al Auto;
ALI YAZDCHI, doing business as Al Auto
Plaintiffs - Appellants
v.
AMERICAN HONDA FINANCE CORP; DALLAS AUTO AUCTION INC
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Texas, Dallas
USDC No. 3:04-CV-203
Before KING, GARZA, and PRADO, Circuit Judges.
PER CURIAM:*
Plaintiffs-appellants Ali and Ahmad Yazdchi (“plaintiffs”)
contend that the district court abused its discretion by
dismissing with prejudice their suit against defendants-appellees
American Honda Finance Corp. (“AHFC”) and Dallas Auto Auction,
Inc. (“DAA”) (collectively, “defendants”). Because we find no
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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abuse of discretion, we AFFIRM.1
I. Factual and Procedural Background
The underlying suit follows a 1999 suit brought by the State
of Texas against Ali Yazdchi for fraud, insurance fraud,
deceptive trade practices, theft, and falsification of automobile
title documents. The State contended that since the early 1980s,
Ali Yazdchi purchased salvage, flooded, wrecked, and recovered
stolen vehicles from auto auctions, superficially repaired the
damaged ones to appear as if they were in good condition, rolled
back the odometers on some of the cars, and sold them to
unsuspecting customers for more than their worth. The suit was
ultimately resolved in 2000 by an agreed final judgment that
restrained Ali Yazdchi from engaging in these types of acts,
awarded damages, attorneys’ fees, and expenses to the State, and
appointed a receiver to distribute, as restitution to Ali
Yazdchi’s injured customers, much of Ali Yazdchi’s frozen funds
and the proceeds from the sale of most of his remaining vehicles.
In December 2003, plaintiffs Ali and Ahmad Yazdchi, who are
brothers, filed the present suit alleging that AHFC, through its
alleged apparent agent DAA, sold them twenty-one damaged Hondas
and Acuras between 1997 and 1999 while representing that the cars
were in excellent condition. Plaintiffs claim that they
1
Plaintiffs’ motion to strike defendants’ briefs is
denied. The briefs complied with all procedural requirements and
addressed the relevant issues in this appeal.
2
innocently resold the vehicles to consumers and ultimately had to
pay the State of Texas $3 million as a result of their reliance
on defendants’ alleged misrepresentations.
On April 11, 2004, the district court issued an amended
scheduling order that established January 31, 2005, as the
deadline for all discovery and April 4, 2005, as the beginning of
trial. The deadline for discovery was later extended to February
28, 2005. On April 29, 2004, DAA served plaintiffs with
interrogatories, requests for production of documents, and
requests for admissions, and AHFC served its interrogatories and
requests for production on May 17, 2004.
Ahmad Yazdchi failed to respond at all, and Ali Yazdchi’s
interrogatory responses generally instructed the defendants,
without referencing any specific documents, to check their own
business records for the requested information, to check with
courthouses for the information, or to wait for the information
to become available. Similarly, Ali Yazdchi answered the great
majority of document requests by stating that the documents were
not available and would be “provided at a later time.” After
attempts by AHFC and DAA to get plaintiffs to comply with the
discovery requests, the district court issued an order on August
26, 2004, compelling plaintiffs to supplement their inadequate
responses to DAA’s interrogatories and to comply with DAA’s
requests for production. The court also granted sanctions
against plaintiffs in the amount of reasonable expenses and
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attorneys’ fees incurred by DAA as a result of the noncompliance.
Plaintiffs filed a motion to set aside the sanctions, which the
court denied.
Despite the order, Ali Yazdchi only slightly expanded on
some of his earlier interrogatory responses and continued to
point the defendants to other general sources of information,
including his first set of answers that had already been deemed
inadequate by the district court. Ali Yazdchi again failed to
comply with defendants’ requests for production, promising to
turn over the documents at a future time, and Ahmad Yazdchi again
made no response at all. Accordingly, on November 2, 2004, the
district court issued orders compelling each plaintiff to comply
with AHFC’s and DAA’s discovery requests within two weeks of the
order and specifically required independent responses from Ahmad
Yazdchi. The court again awarded reasonable attorneys’ fees--
this time to AHFC--and twice warned plaintiffs that failure to
comply sufficiently with the order would result in the dismissal
of their case.2 The court also noted plaintiffs’
“unprofessional, and sometimes abusive, conduct towards opposing
counsel.”
2
Discussing the order relating to AHFC’s discovery
requests, the court wrote, “The Court warns both Plaintiffs that
failure to sufficiently comply with this order may result in the
dismissal of their case.” Later, discussing the order relating
to DAA’s discovery requests, the court wrote, “The Court warns
Plaintiffs that failure to comply with this order will result in
the dismissal of their case.”
4
Again, however, Ali Yazdchi’s supplemental interrogatory
responses contained the same deficiencies, and although he
produced a set of documents to defendants, it mostly consisted of
court filings, correspondence between the parties, copies of his
prior discovery responses, and other miscellaneous documents. A
document purportedly containing Ahmad Yazdchi’s interrogatory
responses was finally submitted, but the handwritten document
appears to be a photocopy of Ali Yazdchi’s answers with Ahmad
Yazdchi’s name written over that of Ali Yazdchi on the first
page--but not the last page, which still said that the document
provided Ali Yazdchi’s interrogatory answers. The document also
falsely represented that it was sworn before a notary public in
Harris County, Texas, when the seal shows, and plaintiffs
concede, that it was witnessed by an Iranian translator. Ahmad
Yazdchi failed to produce any additional documents, claiming that
they were all in Ali Yazdchi’s possession.
On January 31, 2005, the district court dismissed the action
with prejudice. The court later denied plaintiffs’ motions for
new trial and for reconsideration, and plaintiffs timely
appealed.
II. Analysis
Under Rule 37(b)(2) of the Federal Rules of Civil Procedure,
a district court may impose “just” sanctions on a party who fails
to comply with a discovery order, including the dismissal of a
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plaintiff’s action with prejudice.3 A court’s decision to impose
this severe sanction may only be reversed for an abuse of
discretion, but several considerations guide our inquiry.
First, dismissal is authorized only when the
failure to comply with the court’s order
results from willfulness or bad faith, and not
from the inability to comply. Next, dismissal
is proper only in situations where the
deterrent value of Rule 37 cannot be
substantially achieved by the use of less
drastic sanctions. Another consideration is
whether the other party’s preparation for
trial was substantially prejudiced. Finally,
dismissal may be inappropriate when neglect is
plainly attributable to an attorney rather
than a blameless client, or when a party’s
simple negligence is grounded in confusion or
sincere misunderstanding of the court’s
orders.
Prince v. Poulos, 876 F.2d 30, 32 (5th Cir. 1989). Additionally,
the factual findings on which the district court based its
decision are reviewed for clear error. See Bluitt v. Arco Chem.
Co., 777 F.2d 188, 191 (5th Cir. 1985).
The record in this case confirms that the district court did
3
Rule 41(b) also allows dismissal for failure to comply
with a court order. However, district courts that dismiss an
action with prejudice under this rule must make express findings
concerning whether less drastic sanctions would serve the
purposes of the rule, which the court here did not do. See Coane
v. Ferrara Pan Candy Co., 898 F.2d 1030, 1033 n.2 (5th Cir.
1990); Batson v. Neal Spelce Assocs., 765 F.2d 511, 516 n.2 (5th
Cir. 1985). We need not address dismissal under Rule 41(b),
however, because Rule 37 provides a proper basis for dismissal
even without an express discussion of lesser sanctions by the
lower court. Batson, 765 F.2d at 516. This court can “affirm
the district court’s judgment on any grounds supported by the
record.” Sojourner T v. Edwards, 974 F.2d 27, 30 (5th Cir.
1992).
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not abuse its discretion. While plaintiffs’ excuse of
inexperience with the legal system could arguably explain their
initial failure to provide adequate responses to the discovery
requests, the willfulness of their actions is evidenced by their
continued failure to comply even after the specific inadequacies
of their responses were detailed in several requests and motions
from defendants and two orders from the district court. For
example, like most of his interrogatory responses, Ali Yazdchi
initially sidestepped DAA’s request that he specifically detail
the defects that were allegedly undisclosed for each vehicle sold
to him, responding that the information could be obtained from
defendants’ business records. After defendants pointed out the
inadequacy of this response and the court ordered Ali Yazdchi to
supplement his answers, he updated his answer to generally assert
that all of the cars were damaged and that the details could be
found in the prior lawsuit brought by the State of Texas or
defendants’ business records. Even after the district court’s
second order noted Ali Yazdchi’s continued failure to address the
specific defects of each individual vehicle, he again generally
asserted that all of the vehicles were in accidents and damaged.
The record is replete with similar instances of generalized or
nonresponsive answers to discovery requests that, in light of the
specific requests for compliance by defendants and the court,
show the willfulness of plaintiffs’ actions.
Ali Yazdchi’s responses to the discovery requests were no
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better; even after two orders compelling his adequate compliance
with defendants’ discovery requests, he only turned over a small
assortment of court filings, other miscellaneous documents, and a
few documents of general relevance to this case. The record also
indicates that Ali Yazdchi made certain relevant documents
available at a meeting with defendants but withdrew the documents
before they could be copied or listed for a discoverability
determination by the district court. Although Ali Yazdchi later
claimed that the withdrawn documents were not relevant, his
failure to provide them after the court specifically ordered him
to do so is without excuse.
As another example of plaintiffs’ contumacious conduct,
Ahmad Yazdchi failed to respond altogether until after the
district court’s second order. Despite the district court’s
explicit command that he independently respond to the discovery
requests, it is apparent that Ahmad Yazdchi merely submitted Ali
Yazdchi’s answers with his own name written on the first page.
Plaintiffs also misrepresented that the document was notarized by
a notary public in Harris County, Texas when it was actually
sworn before an Iranian translator, making the answers
effectively unsworn. See TEX. GOV’T CODE ANN. § 602.002.
Plaintiffs’ contention that two court order violations are
insufficient to justify dismissal is belied by precedent that has
affirmed dismissal under similar circumstances where only one
discovery order has been violated. See Truck Treads, Inc. v.
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Armstrong Rubber Co., 818 F.2d 427, 429 (5th Cir. 1987); see also
Coane v. Ferrara Pan Candy Co., 898 F.2d 1030, 1032 (5th Cir.
1990) (dismissing an action principally because the plaintiff
failed to obey two court orders). Also, despite plaintiffs’
claim that the litigation was “in its early stages,” the case was
dismissed after nine months of discovery failures with only
approximately two months remaining until trial. That plaintiffs
point to two cases finding eight months’ delay insufficient to
warrant dismissal in other contexts has little relevance here,
where the trial and discovery schedule rendered the delay
excessive. And although plaintiffs correctly note that the delay
here was not characterized by total inactivity, the willfulness
of their noncompliance with the district court’s orders is
nonetheless sufficient to justify dismissal. See McNeal v.
Papasan, 842 F.2d 787, 790-91 (5th Cir. 1988).
The record also supports the conclusion that lesser
sanctions would have been ineffective, as the district court
twice required plaintiffs to pay defendants’ reasonable
attorneys’ fees and expenses incurred due to plaintiffs’
noncompliance with the discovery requests. The district court
warned plaintiffs twice in its second order that their suit would
be dismissed if they did not adequately supplement their
discovery responses, and their failure to adequately comply when
apprised of this consequence warrants dismissal.
Finally, defendants were plainly prejudiced by plaintiffs’
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failure to provide adequate discovery responses, as trial was
roughly two months away at the time that the action was dismissed
and defendants had obtained virtually no information of any
relevance after nine months of discovery attempts. See Prince v.
Poulos, 876 F.2d 30, 32-33 (5th Cir. 1989). The information
sought by defendants, which included the specific defects that
they allegedly failed to disclose to plaintiffs for each car, was
crucial to developing their defense, and the withholding of this
information hindered defendants’ ability to prepare for trial.
While courts are more lenient with pro se litigants, we have
cautioned that “[t]he right of self-representation does not
exempt a party from compliance with relevant rules of procedural
and substantive law,” Hulsey v. Texas, 929 F.2d 168, 171 (5th
Cir. 1991), and that “[t]hose who venture into federal court
without the assistance of counsel cannot . . . be permitted to
enjoy much or protracted advantage by reason of that
circumstance.” Brinkmann v. Johnston, 793 F.2d 111, 113 (5th
Cir. 1986). We are satisfied that the district court in this
case extended the appropriate amount of leniency to plaintiffs.
AFFIRMED. MOTION DENIED. Costs shall be borne by
plaintiffs.
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